By Ajong Mbapndah L & Prince Kuripati
On the sidelines of the recent Power Africa Summit in Washington,DC,PAV caught up with recently caught up with Roman Py, Head of Transactions with the African Infrastructure Investment Managers (AIIM),to discuss infrastructure development in Africa .
Introducing AIIM, Romain Py said it was a private equity firm whose interests is in investing capital into development projects mainly targeting infrastructure development. AIIM’s main target areas include telecoms infrastructure, mainstream energy, transport and power i.e. both thermal and renewable.
AIIM was formed 18 years ago and has subsequently grown in leaps and bounds ever since ,Romain Py said. To date AIIM has managed assets worth over 2 billion dollars and is currently managing other million dollar assets and operations in 15 countries mostly in West Africa.
Explaining how they take on projects, My Roman Py stated that AIIM has a two-fold criteria it uses in selecting which projects to pursue and which projects not to pursue. The first criteria AIIM employs covers the country as a whole, AIIM looks at the prevailing socio-economic-political environment to determine the suitability of running projects in a country. As is the case with any other investment, Mr Roman Py said that AIIM assesses whether it’s feasible to invest in a country considering the current investment climate. If the environment is unstable owing to political disturbances and the likes, AIIM takes the decision not to invest in that particular country. The same also applies to the economic aspect, if the economy of the country is fragile, then it’s unfavourable for AIIM to invest in that country.
The second aspect pertains to sector specific investment climate. Mr Roman Py stated that on occasions, the overall socio-economic-political environment maybe stable but when one looks closely, it’s possible to see that in one area for instance energy, the legal framework covering that area maybe vague and ambiguous while the legal framework for investing in telecoms infrastructure maybe clear and favourable for investment. In this instance, AIIM will then make a decision on investing in the one area that is investor friendly and disengage from the other unfavourable investment sectors.
During its 18 years in existence, AIIM has had some big successes according to Mr Roman Py. While AIIM’s operations have seen the company working in various countries around the continent, it is in West Africa that AIIM has managed to record massive success. Mr Roman Py says AIIM’s first big success story came in 2014 when the firm managed to finish a 240 megawatt Independent Power Producer (IPP) plant in Ghana. This was soon followed by a 450 megawatt gas fired plant a year later in Nigeria. In 2017, AIIM also finished another 90 megawatt IPP power plant in Mali, the first of its kind in the country. In the same year, AIIM also won a bid for another IPP power plant in Ghana. AIIM has other IPP power plants still in progress in Kenya and in Cote d’ voire.
As is the norm when running a business, AIIM encounters operational challenges in its line of business. Though there are quite a number of challenges, Mr Roman Py stated that their two biggest challenges include the ever-changing socio-political environment in African countries and power shortages. He said that while AIIM diligently assesses each country before starting projects, there are cases where the environment quickly changes from stable to unstable owing to unforeseen circumstances. Also, AIIM encounters power challenges as most African countries have unreliable power supplies which makes it difficult for AIIM to operate as most its projects require high amounts of power.
Roman Py went on to state that the amount of capital being injected into infrastructure development projects has sharply decreased in recent years .He attributed this to the investment climate which is slowly deteriorating. Roman Py said that Africa saw massive capital injection in the last 10 years, but that has since stagnated in the past two years. To Roman Py, this is as a result of the failure by African governments in particular and also private entities to close projects. He said that there are many ‘ground-breaking’ ceremonies in Africa where Heads of State and Government launch major projects but abandon them soon afterwards leaving a trail of unfulfilled mega-deals.
This problem can be rectified however as Roman Py said African countries need to move away from signing too many deals that ultimately fail, but rather focus on projects that they can fulfill and close. Roman Py said that “success breeds success” and as such once the first project succeeds, then it sets a good precedent for the next project to succeed in the end culminating in a permanent circle of successful projects.
Roman Py also took time to comment on AIIM’s relationship with the Chinese. He said the relationship is more of a complementary relationship rather than a competitor relationship. This he explained saying Chinese come to Africa as contractors aiding government development projects and operate as contractors when on the ground. However, AIIM doesn’t operate as a contractor as it mostly conducts its business and operations separate from the government, it is more of a private entity.
Roman Py said that countries that want to grow and rise in the near future need to be able to attract value and create capital as it is the only way forward,citing Ethiopia, Tanzania, and Senegal as encouraging examples.